Sun Life Financial teams up to buy Malaysian insurer for $586 million

Sun Life Financial Inc teams up to buy Malaysian insurer for $586M

TORONTO — Sun Life Financial Inc. and Khazanah Nasional Berhad are teaming up to purchase 98% of a Malaysian life insurance company from its two current owners, which include British insurance group Aviva PLC.

Toronto-based Sun Life and Khazanah are purchasing the CIMB Aviva Assurance Berhad life insurance company as well as CIMB Aviva Takaful Berhad, which provides a different type of insurance, for a total shared cost of US$586 million.

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Sun Life said its Malaysian transaction includes entering into a new 20-year exclusive agreement that will allow the life insurance company to sell to CIMB Bank’s client base. CIMB Group will retain a 2% share in the company.

“This transaction is perfectly aligned with our strategy for expanding our footprint in Asia,” said Kevin Strain the president of Sun Life Financial in Asia.

He said Khazanah and CIMB are “very strong partners with a broad distribution platform, and we are investing in a country with one of the most developed economies in the ASEAN region and a growing middle class.”

Media reports that a deal was imminent emerged recently but hadn’t been confirmed until Thursday’s announcement by Sun Life, which is one of Canada’s largest life insurance companies.

Reports have said Manulife Financial Corp., another Canadian company that has been growing in China and elsewhere in the Asia-Pacific region, had also been interested in acquiring the Malaysian assets from Aviva and CIMB.

Sun Life and Khazanah are each acquiring 49% of the company from Aviva International Holdings Ltd. and CIMB Group Holdings Berhad (CIMB Group), respectively.

The transaction includes an exclusive right to distribute insurance products, including takaful products, through CIMB Bank’s network across Malaysia. This network includes 312 branches across the country and eight million customers.

The transaction is expected to close by the first half of 2013, pending regulatory approvals in Canada and Malaysia.